With the constant changes in the interest rates, stock market plunges and concern for inflation, one cannot be diligent enough to prepare before a financial crisis occurs. No matter your situation, it’s never too late to start saving money. By planning in advance, setting financial goals and remaining consistent to a financial plan, one can expect to build a savings account for future needs.
Save for Emergencies
The challenges of life often come unexpected. And though difficulties come and go, some things can be avoided. No one wants to get caught soaked in a rainstorm, yet it’s entirely preventable. Checking the morning forecast, and carrying your umbrella will save you from getting drenched. Similarly, being financially prepared for unexpected emergencies will save you from suffering the consequences. In our society of instant gratification, the world continually reminds us through media to consume more and save less. Yet, anything can go wrong in any given moment. For example, an unexpected hospital stay can cost thousands of dollars. Or, a sudden job lay-off results in unpaid bills. Many recommend to save six months of earnings in a savings account for rainy day emergencies. Don’t get caught in the rain without an umbrella. Opening a savings account can protect one from the expensive financial storms of life.
Save for Retirement
According to the 2015 OASDI Trustees Report, The Social Security Trust Fund will exhaust all funds by the year 2034. Unless Social Security undertakes productive entitlement reform, many future retiree benefits may be drastically cut. Experts anticipate future benefit payments to decrease approximately 25 percent than what the plan initially promised. For example, a retiree expecting to receive $2,000 per month in Social Security benefits would only collect approximately $1,500 per month. Retirees depending on Social Security benefits alone leave themselves vulnerable to lean financial survival. Yet, those who remain proactive choose in advance to supplement their benefits with additional sources of income.
In the vast changing world of our nation’s economy, one can conclude from the fluctuations of the stock market nothing remains the same. Similarly, the financial strategies of yesterday require reevaluation during certain changes in life. Decades ago, traditional pension plans became the bread and butter of retirees, and almost 90 percent of employees owned a pension. Today, the number has drastically reduced to almost 35 percent. Employers desiring to limit their liability opt to provide their employees with a more defined employee contribution retirement plan. While 401K plans involve certain risk, the earlier an employee contributes to their plan proves more beneficial. The millennial generation benefits most by contributing to their 401K plan. With time and the power of compound interest on their side, millennials can ride the waves with resiliency through the sudden ebb and flow of stock market plunges. With additional sources of income needed to retire comfortably, a 401K plan replaces most traditional pension plans as a supplement source of income.
Save to Increase Wealth
Wealth doesn’t come overnight; However, with sound financial preparation and discipline, saving money accumulates over time. The stock market remains one of the best avenues to increase your savings through investments for longevity. Because of the resilience of the market, remaining in place over time eventually pays off. For shorter financial savings, a savings account or CD is an excellent place to start.
1) Set financial saving goals. Talk to a financial advisor, and seek advice on investments. Write a financial vision for your future. Create a saving plan and stick to it.
2) Budget and record spending. Documenting every dollar spent is often eye- opening. Many times, we spend money unaware of the cost. Tracking money spent requires an inward analysis on where money went.
3) Shop for where to save. Some banks offer specials to open an account. A good savings account will yield two percent interest. A CD yielding compounded interest daily instead of monthly proves the better way to earn higher interest.
4) Make saving a lifestyle change. Sticking to a money diet benefits your financial health overall. Trim back unnecessary spending. Shop by a list, and avoid impulse purchases. Avoid racking up additional loans or credit card debt. When making purchases, determine if it’s a want or need. Only purchase items needed.